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Mexico reimburses foreign tourists for sales tax expenditures

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Jun 09, 2008

Sales tax rebates will be paid to foreign visitors beginning in June to enhance the experience of traveling to Mexico and make the country a destination of choice for international tourists.

The measure will go into effect once the Tax Administration Service (TAS), grants concessions to three companies to operate the program.

As part of their main objective, which is to increase the flow of international tourists to the country, the Mexico Tourism Board (MTB), is spreading the word to their targeted markets where they concentrate heavily on tourism promotion with the hopes of encouraging foreign travelers to visit Mexico this summer

“With this action, Mexico is joining the world’s tourism powerhouses in striving to give a value-added incentive to tourists who are seeking to discover our diverse attractions beyond their borders,” said Oscar Fitch Gomez, CEO of the MTB.

The Value Added Tax (VAT) will be returned to foreign tourists who can prove they have spent a minimum of 1,200 pesos (approximately $160 dollars) – on Mexican territory and who are returning home by sea or air.

Following the model established in other parts of the world, sales tax paid for the purchase of services, such as lodging and food, will not be refunded.

The refunds are applicable for purchases made with debit or credit cards, but only for cash transactions in which the cost of the item was less than 3,000 pesos. The purchases can be made in stores and establishments that are affiliated with a TAS -authorized service operator.

Tourists will have the right to receive up to 50 percent of the net rebate – an amount not to exceed 10,000 pesos – in the form of cash; the remaining 50 percent will be refunded via electronic funds transfer within a period of 40 days.

Travelers that visit our country should present proof that they received the merchandise from the store of purchase and submit a reimbursement request form, along with bank statement.

Foreigners visiting our country should present receipts for their purchases, a form soliciting the rebate and if necessary, a bank receipt. In each case, the rebate operator will install clearly identified service centers where the relevant documentation can be verified and the sales tax refunded.

The procedure will be implemented gradually across the country. The first phase will be launched this summer at air terminals in Mexico City, Cancun, Guadalajara, Los Cabos and Puerto Vallarta, all of which are cities with a sizable flow of international visitors.

The following phase, scheduled to go into effect six months after the initial launch, will include the airports in Monterrey, Cozumel, El Bajio, Mazatlan and Morelia; the system will later be set up at the country’s remaining airports, as well as at sea ports such as Acapulco, La Paz, Puerto Vallarta, Mazatlan and Huatulco.

The operators of the service – Premier Tax Free, Global Refund Mexico and YVESAM Retornos Mundiales S.A. de C.V. – have successfully applied this model in other parts of the world. Global Refund and Premier Tax Free are companies with presence in over 50 countries.

Since each state possesses different programs of collection, for the structuring and definition of this model in Mexico, the Secretary of Estate and Public Credit (SHCP) performed diverse consultations and carried out comparatives of the systems that operate on a worldwide basis.

The European model, which contemplates various authorized users in free competition, and the systems of the countries of the European Union were also revised such as: Switzerland, Norway, Austria Spain, Italy; as well as the United States of America and Canada; as well as those of Taiwan, Chinese and Thailand, among others.

The Mexico Tourism Board is confident that it will be feasible for SAT to implement the program and resolve the demands of our visitors in a timely manner.

ftnnews.com

Mexico reimburses foreign tourists for sales tax expenditures
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